- 07 Apr
The Perfect Invoice Finance Product
Below is the profile of the perfect invoice finance product (from the customer's perspective) based on our experience and market research:
1) Overdraft style finance product that grows with turnover (with invoice finance risk controls behind the scenes) - clients just want predictable levels of funding without any hassle and they want the funding to grow in line with increases in their sales. They do not want any complicated restrictions such as funding limits.
2) Quasi overdraft pricing on a tariff basis - customers tend to prefer invoice finance to be charged on a tariff basis (rather than an all inclusive fee although that type of product also has a place) where they only pay for what they use. One of the big complaints if often about the price of invoice finance so the pricing needs to be closer to that of an overdraft (having said that there are some cheap deals around at present if you look around).
3) Online approval and sign up - clients say that they want to be able to apply online and to be approved online.
4) Very short notice of termination periods and no minimum contract periods - perhaps a few days or even the ability to terminate immediately at any time (as you often have with spot factoring and spot discounting).
5) No additional security such as personal guarantees.
6) No minimum charges.
7) Flexibility - clients like the idea of a product being flexible if they need a little extra funding (an overpayment) or if they run into problems - this could be built into the agreement.
8) Electronic upload of their invoices that operates without user intervention (some invoice finance companies already have this) and an electronic web based interface to view account information and request funding.
9) Same day funding without additional charge - clients want to be able to request funds and receive them the same day without being charged for the transfer.
Many of the components of the perfect invoice finance product mentioned above are already available through particular products although nothing seems to address all the issues together. Hopefully though, the above might be food for thought for any invoice finance company that wants to create the "perfect invoice finance product".